“Bringing the 1,240 MW Mong Duong 2 plant on-line six months early is a significant milestone for Vietnam and for AES,” said Andrés Gluski, AES President and Chief Executive Officer. “Executing on our 7 GW construction program is the main driver of our cash and earnings growth through 2018. Beyond Mong Duong 2, we see a number of potential opportunities for AES in Vietnam, to help meet their rapidly growing demand for electricity.”
“Mong Duong 2 amassed 18 million man-hours without a lost time incident, with almost 44 million man-hours worked, representing AES’ world-class safety and engineering and construction standards,” said Michael Chilton, AES Senior Vice President for Global Engineering and Construction. “Our remaining 6 GW under construction are progressing well and are on time and on budget.”
The plant was built under a Build-Operate-Transfer (BOT) agreement and has a 25-year Power Purchase Agreement (PPA) with Electricity of Vietnam (EVN), a state-owned utility, as well as 25-year coal supply agreement with Vinacomin, a state-owned entity. The PPA includes a capacity payment denominated in U.S. Dollars and a fuel pass-through that protects the project from fluctuations in coal prices. AES has a 51% equity interest in the $1.95 billion power plant, while PSC Energy Global Co., Ltd., a wholly-owned subsidiary of POSCO Power Corp., and Stable Investment Corporation, a wholly-owned subsidiary of China Investment Corporation, own 30% and 19%, respectively. Mong Duong 2 was financed with $1.5 billion in non-recourse debt. The plant is the largest private sector power project in Vietnam and is the country’s first new private sector power plant to be commissioned in the last ten years.
According to the Vietnam institute of Energy and the National Center for Socio-Economic Information and Forecast, Vietnam’s power demand and GDP are expected to grow by 10.5% and 6.5%, respectively, over the next five years. The Government of Vietnam has future plans to increase the country’s installed capacity by more than 60 GW over the next five years.
Mong Duong 2 complies with the Vietnam and World Bank environmental standards and also allows lenders to meet the requirements of the Equator Principles. Mong Duong 2 is located in the Quang Ninh province of Vietnam.